Taxpayer-owned Royal Bank of Scotland yesterday emerged as one of the main targets of a multi-billion pound legal case brought by the authorities in the United States.
RBS, Barclays and HSBC are among 17 banks being sued by America’s Federal Housing Finance Agency.
It claims the banks used false claims in sales documents to sell billions of dollars’ worth of mortgage investments to US government agencies, which were then hit by massive losses in the US mortgage crash.
Target: Bailed-out RBS said it will defend the claims 'vigorously'
If successful, the claim would be a savage blow to RBS’s finances and shatter any hopes of British taxpayers making back the cash they invested in bailing out the bank for years to come.
The 17 banks, which include most of America and Europe’s leading financial institutions are alleged to have a sold a total of more than $200 billion (£123billion) of mortgages to America’s state-sponsored mortgage companies Freddie Mac and Fannie Mae at the height of the credit boom. RBS sold £18.5billion of the mortgages, second in scale only to JP Morgan Chase, which sold £20.3billion.
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